Freddy Enrique Chavez v Inspector General in Bankruptcy
[2000] AATA 1018
•25 October 2000
ADMINISTRATIVE APPEALS TRIBUNAL) V2000/224
)
GENERAL ADMINISTRATIVE DIVISION )
Re:FREDDY ENRIQUE CHAVEZ
Applicant
And:INSPECTOR GENERAL IN BANKRUPTCY
Respondent
DECISION [2000] AATA 1018
Tribunal : Mr W. G. McLean, Member
Date : 25 October 2000
Place : Melbourne
Decision: For reasons given orally at the hearing the decision under review is affirmed.
(Sgd) W. G. McLean
MemberBANKRUPTCY — application for early discharge — disclosure of creditor — disqualifying criteria — affirmed
Administrative Appeals Tribunal Act 1975 ss.37, 43(2A)
Bankruptcy Act 1966 ss.149s, 149ZA
REASONS FOR DECISION
25 October 2000 Mr W.G. McLean, Member
At the conclusion of the hearing in this matter the terms of the decision and the reasons therefore were stated orally. The respondent's representative made a request that the Tribunal furnish him with a statement in writing of the reasons of the Tribunal for its decision under subsection 43(2A) of the Administrative Appeals Tribunal Act 1975 ("the AAT Act").
The oral reasons for decision were transcribed by Auscript, the Commonwealth reporting service. The transcript of the oral reasons is furnished to the applicant and to the respondent as the statement in writing of the reasons for the Tribunal's decision. The transcript is as follows.
This is the matter of V00/224, Mr Freddy Chavez and the Inspector-General In Bankruptcy. The reasons for decision.
The Tribunal considered an application from Mr Freddy Enrique Chavez for the review of a decision of the Inspector General in Bankruptcy made on 27 January 2000. The Inspector General In Bankruptcy decided to uphold a decision of the Official Trustee in Bankruptcy on 25 October 1999 not to grant an early discharge from bankruptcy. The practical effect of the rejection is that the applicant will not be eligible for discharge until 9 April 2002.
The jurisdiction of the Tribunal to review the decision is contained in section 149ZM(b) of the Bankruptcy Act 1996 ("the Act").
The Tribunal received into evidence the documents lodged pursuant to section 37 of the AAT Act.
Mr Chavez appeared and gave sworn oral evidence. The respondent was represented by Mr Galvin of counsel.
Mr Chavez became bankrupt on 9 April 1999 following the presentation of a debtors petition to the Insolvency and Trustee Service of Australia. The official Trustee is the Trustee of the bankrupt's estate.
The applicant filed his statement of affairs with the Trustee on 9 April 1999, disclosing the following eight unsecured creditors:
Creditors Name Nature of Debt Amount Owing $
American Express credit card 1550
Australian Guarantee Corporation Ltd personal loan 5600
Commonwealth Bank credit card debt 7600
Westpac Bank credit card debt 2700
National Australia Bank Mastercard 3200
National Australia Bank Visa card 2200
Australian Manufacturing Workers Union union fees 214
The Total Amount of Creditors $23,064
On 15 April 1999 the Trustee wrote to the bankrupt advising him, amongst other things, that from the information provided in his statement of affairs he may be eligible to apply for an early discharge from his bankruptcy and that he could apply for such early discharge six months after 9 April 1999. The Trustee also advised the creditors on 20 April 1999, amongst other things, that on the information available the bankrupt is eligible for early discharge.
On 3 May 1999 Mr Chavez wrote to the Trustee and enclosed a statement of debt from an additional creditor, Avco Financial Services, of which he says, and I quote:
I missed to mention in my statement of affairs to my bankrupt estate —
and he is referring to the Avco debt.
Mr Chavez applied to the Trustee for early discharge from his bankruptcy on 14 October 1999 and his application was rejected by the Trustee on 25 October 1999 on the ground that he was disqualified because of his failure to disclose the debt of $1298 to Avco in his statement of affairs.
The applicant gave evidence at the hearing that he had inadvertently missed the Avco debt at the time that he lodged his statement of affairs with the official Trustee. He contended that he had demonstrated his honesty of intent by notifying the Trustee in writing on 3 May 1999 that his statement of affairs did not include a disclosure of the Avco debt. The respondent does not question the honesty of the applicant in this matter.
The Tribunal is of the view that it would be impracticable to assume that the bankrupt could lodge a statement of affairs, and subsequently amend that document by writing to the Trustee and informing him that he had forgotten to include one or more of his creditors. To suggest that the bankrupt could amend his statement of affairs in such a way would seem to cause uncertainty regarding the date of the commencement of the bankruptcy and resultantly the date of the conclusion of the bankruptcy.
The following relevant legislation is provided by the Bankruptcy Act 1966.
Subdivision B — Application for Early Discharge
S149S(1)At any time after 6 months from:
(a)the date on which a bankrupt filed his or her statement of affairs; or
(b)the date of commencement of this section;
whichever is the later, the bankrupt may apply in writing to the Trustee for early discharge from bankruptcy.
(2)If the Trustee is a registered Trustee, the application is not duly made unless a copy of the application has been given to the Official Receiver.
(3)A bankrupt is not eligible to be discharged under this Division unless he or she is eligible under Subdivision C to apply for early discharge and is not disqualified under Subdivision D from early discharge.
(4)The Trustee must determine the application as soon as practicable.
Subdivision D – Disqualifying Criteria
S149ZA – Failure to Disclose Liability(1)A bankrupt is disqualified from early discharge if the bankrupt has at any time failed, whether intentionally or not, to disclose to the Trustee any liability of the bankrupt that existed at the date of bankruptcy .
(2) The Trustee may determine that the bankrupt has failed to disclose a liability as mentioned in subsection (1) if:
(a)a person has lodged with the Trustee a proof of debt that has been accepted by the Trustee; and
(b)the bankrupt's statement of affairs:
(i)did not disclose that a person was a creditor; or
(ii)did not disclose the debt claimed by the person or disclosed part only of that debt.
The Tribunal has considered the findings in the matter of Patterson and the Inspector General in Bankruptcy, V99/901 and concurs with the finding that section 149ZA of the Act does not give the Trustee any discretion to have regard to the bankrupt's reasons for failure to disclose a creditor in his statement of affairs.
The Tribunal finds that Mr Chavez unintentionally failed to notify the Trustee in his statement of affairs that was lodged by him with the Trustee on 9 April 1999 that Avco was a creditor to whom he was indebted.
Section 149ZA disqualifies the bankrupt from early discharge if he has at any time failed, whether intentionally or not, to disclose to the Trustee any liability of the bankrupt that existed at the date of the bankruptcy. The Trustee may determine that the bankrupt has failed to disclose liability if he did not disclose a creditor in his statement of affairs. In this case the Trustee has correctly made such a determination and accordingly disqualified the applicant from early discharge.
The decision under review is affirmed.
I certify that the nineteen [19] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr W.G. McLean, Member
signed: . . . . . . . . . . . . . . . . . . . . . . .
Personal AssistantDate of Hearing: 25.10.00
Date of Decision: 25.10.00
Solicitor for the Applicant: Nil — IN PERSON
Counsel for Respondent: Mr Galvin
Solicitor for the Respondent Australian Government Solicitor
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